Integration of Financial Markets - Global Crisis and Its Contagious Effect

Abstract

Global production, marketing, human resource and finance functions are no longer restricted to national boundaries. Consequently, financial markets are closely integrated across the globe that has benefitted both corporate and investors of transnational boundaries. However, the integration of global financial market is like a double edged sword that has offered enough avenues for both fund seeking corporates and investors. On the other hand, it has carried evil effects in its underbelly the financial crisis like Subprime crisis of developed West. Global financial crisis in the recent past (2008-2011) that has occurred in U.S carried the ripple effect on India too.
Furthermore, financial crises occurred in the last two decades – to name a few - Argentina and Mexican currency crises, financial crisis of PIGS (Portugal, Italy, Greece and Spain), South East Asian currency crisis were more pronounced on the contagious effect on the global trade and investment. The intent of this paper is to analyse the causes behind such crises, their effects on trade and investments and the lessons learnt for the future policy measures to be adopted by nations round the globe and International Financial Institutions.